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Apple's Downfall: Tech Weekly Recap

Written by: Chris Ciaccia01/26/13 - 9:30 AM EST

Tickers in this article:
AAPL GOOG IBM MSFT NFLX

NEW YORK ( TheStreet) --
Apple (AAPL) was the talk of tech this week, reporting first-quarter results on Wednesday. It's been a string of bad news for the world's largest tech company, and it seems as if no end is in sight.

The Cupertino, Calif.-based firm generated revenue of $54.5 billion in its fiscal first quarter , up from $46.33 billion a year earlier, earning $13.81 a share. Wall Street analysts were looking for $54.73 billion in revenue and $13.47 per share in earnings.

Apple also changed the way it gives guidance , providing a range for its fiscal second quarter, instead of single line items. Apple forecast revenue between $41 billion and $43 billion, a gross margin between 37.5% and 38.5%, and operating expenses between $3.8 billion and $3.9 billion.

Following the revenue miss and guidance change, several analysts cut their price targets , with a few even removing Apple from buy lists.

Morgan Stanley's Katy Huberty, one of the most respected Apple analysts on Wall Street, removed Apple from her company's Best Ideas list but noted that catalysts will start to appear in the summer of 2013. These include "a lower priced iPhone, similar to iPad Mini, 2) new iPads, including iPad Mini with Retina Display around mid-year, 3) expanded carrier partnerships with T-Mobile in the US, NTT Docomo in Japan, and/or China Mobile in 2H13/2014."

Apple shares got crushed this week, falling 15% to close at $439.85. As a result, Apple lost the title of world's most valuable company, falling behind Exxon Mobil (XOM) .

Google (GOOG) reported fourth-quarter results that beat Wall Street estimates. A key metric of advertising, cost-per-click (CPC), also improved for Google, leading some to think mobile is now making money.

For the fourth quarter, Google earned $10.65 a share on $11.3 billion in revenue, excluding traffic acquisition costs (TAC). With TAC, Google generated $14.42 billion in sales, up 36% year on year, according to CEO Larry Page. Analysts polled by Thomson Reuters expected Google to earn $10.49 a share on $12.3 billion in revenue.

Cost-per-click (CPC) fell 6% year over year but actually rose 2% sequentially, alleviating some of Wall Street's biggest concerns.

The fear about Google is that, going forward, it could struggle to monetize mobile, Deutsche Bank analyst Ross Sandler noted. The analyst, however, highlighted Google's accelerating U.K. mobile revenue as evidence this may not be the case.

The Redmond, Wash.-based firm earned 76 cents a share on a GAAP basis during its fiscal second quarter , generating $21.46 billion in revenue. Analysts polled by Thomson Reuters were expecting 75 cents a share on $21.5 billion in revenue.